Indian Retail With Special Focus On McDonalds India

Project Guide :

Prof. Deepa Rohit

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Group Members

Name Roll Number

Mohit Kanadkhedkar 2012065

Kunal Kapoor 2012073

Anoop Khurana 2012081

Gurpreet Lamba 2012089

Subodh Mayekar 2012097

Pravina Nagpal 2012105

Chanpreet Kaur Obhan 2012113

Index

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Sr.No. Particulars Page Number

1 Indian Retail Industry 4

2 Indian Food Industry 5

3 About McDonalds 6

4 SWOT Analysis 10

5 PESTEL Analysis 14

6 Marketing Mix 7P’s 20

7 Competitors Analysis 28

8 STP Analysis 36

9 Issues 45

10 Solutions 49

11 Bibliography 52

Indian Retail Industry

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Retail industry can be classified into two broad categories – organized retail and unorganized

retail.

Organized retail - Those traders/retailers who are licensed for trading activities and registered

to pay taxes to the government.

Unorganized retail – It consists of unauthorized small shops - conventional Kirana shops,

general stores, corner shops among various other small retail outlets - but remain to be the

radiating force of Indian retail industry.

Overview

Retail industry, being the fifth largest in the world, is one of the sunrise sectors with huge

growth potential and accounts for 14-15% of the country’s GDP. Comprising of organized and

unorganized sectors, Indian retail industry is one of the fastest growing industries in India,

especially over the last few years.

According to the Global Retail Development Index 2012, India ranks fifth among the top 30

emerging markets for retail. The recent announcement by the Indian government with Foreign

Direct Investment (FDI) in retail, especially allowing 100% FDI in single brands and multi-brand

FDI has created positive sentiments in the retail sector.

Emerging Areas

Some sectors that occupy a prominent position with the retail industry are:

Apparel Retail: Everybody understands the impact of fashion and textiles on the

environment. Almost $19.5 billion were spent on online apparel shopping in the year

2009 and increasing since then.

Fashion & Lifestyle Retail: In India the vast middle class and its almost untapped retail

industry are the key attractive forces for global retail giants wanting to enter into newer

markets, which in turn will help the retail to grow faster.

Food & Beverage Retail: Backed by huge potential and changing lifestyles, the food and

beverage retail market is growing at a robust 30-35 per cent per year.

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Pharmaceutical Retail: Driven by therapies like anti-diabetic, vitamin, anti-infectives and

dermatology, it accounted for a robust 15% growth in 2011.

E-commerce or E-tailing – the next big revolution: With the advent of e-commerce in the

retail industry, retail stores are facing stiff competition from e-stores. The rising demand

for e-shopping has lead to a new debate cropping up in the world.

Indian Food Industry

The Indian food services industry is estimated to be nearly worth Rs 75,000 crore (US$ 13.77

billion) and is growing at a healthy compound annual growth rate (CAGR) of 17 per cent,

according to a Franchise India report released at the Indian Restaurant Congress. It is expected

to reach Rs 1,370 billion (US$ 25.16 billion) by 2015. "In the future, the organised market is

expected to grow even faster - at around 20 to 25 per cent per annum," according to Mr Gaurav

Marya, President of Franchise India.

The Indian food services industry is anticipated to grow at a CAGR of around 12 per cent during

2012-2015, as per a RNCOS research report titled, 'Indian Food Services Market Forecast to

2015'.

In addition, India has also been recognised as one of the largest potential market for organic

food consumption worldwide. The organic food is invariably increasing among the Indian

retailers, especially with the niche retailers, as per RNCOS research report titled, 'Indian Organic

Food Market Analysis'. The report further highlighted that the sector will grow at a CAGR of 15

per cent during 2011-2013.

India is fast becoming an important investment destination for foreign players with companies

like Starbucks and American brand Dunkin' Donuts, who have recently entered the country.

About McDonalds

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McDonald's Corporation is the world's largest chain of hamburger fast food restaurants,

serving around 68 million customers daily in 119 countries. Headquartered in the United States,

the company began in 1940 as a barbecue restaurant operated by Richard and Maurice

McDonald; in 1948 they reorganized their business as a hamburger stand using production

line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He

subsequently purchased the chain from the McDonald brothers and oversaw its worldwide

growth.

A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation

itself. The corporation's revenues come from the rent, royalties and fees paid by the

franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27

percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating

income to $3.9 billion.

McDonald's primarily sells hamburgers, cheeseburgers, chicken, French fries, breakfast items,

softdrinks, milkshakes and desserts. In response to changing consumer tastes, the company has

expanded its menu to include salads, fish, wraps and smoothies.

McDonald's restaurants are found in 119 countries and territories around the world and serve

68 million customers each day. McDonald's operates over 34,000 restaurants worldwide,

employing more than 1.7 million people. The company also operates other restaurant brands,

such as Piles Café.

Mcdonalds Vision

"McDonald's vision is to be the world's best quick service restaurant experience. Being the best

means providing outstanding quality, service, cleanliness, and value, so that we make every

customer in every restaurant smile."

McDonald's Missions

Be the best employer for our people in each community around the world

Deliver operational excellence to our customers in each of our restaurants; and

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Achieve enduring profitable growth by expanding the brand and leveraging the strengths

of the McDonald's system through innovation and technology.

Year Events

1955 Ray Kroc opens his first restaurant. McDonald’s Corporation is created

1957 Quality, Service, Cleanliness and Value (QSC & V) becomes company

motto

1963 Ronald McDonald makes debut

1965 The company goes public

1968 Big Mac is introduced`

1974 Happy Meal is launched

1996 McDonald’s opens in India, the 95th country

BUSINESS MODEL

Franchise Model – Only 15% of the total number of restaurants are owned by the

Company. The remaining 85% is operated by franchises. The company follows a

comprehensive framework of training and monitoring of its franchises to ensure that

they adhere to the Quality, Service, Cleanliness and Value propositions offered by the

company to its customers.

Product Consistency – By developing a sophisticated supplier networked operation and

distribution system, the company has been able to achieve consistent product taste and

quality across geographies.

Act like a retailer and think like a brand – McDonald’s focuses not only on delivering

sales for the immediate present, but also protecting its long term brand reputation.

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McDonald's in India is a locally owned and managed company run by Indians, employing local

staff, sourcing from local suppliers to serve its customers.

In India, the brand McDonald’s is managed by two entities…Connaught Plaza Restaurants Pvt

Limited, led by Mr. Vikram Bakshi, is spread across North & East of India; and Hardcastle

Restaurants Pvt Limited, led by Ms. Smita Jatia, is spread across West & South of India.

Today, we are 235 restaurants strong and counting, with our presence spread across 45 cities in

the country

When we opened our

doors in India at

Basant Lok in New

Delhi in October

1996, it was the 95th

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country where the McDonald’s was operating. India was the only country in McDonald’s

system, serving a menu which did not have any beef or pork based products.

SWOT Analysis

Strengths

McDonald’s is the market leader in fast food franchise with huge customer base around the

world. It has a strong global presence with its nearest domestic competitor being only half its

size. Approximately 85% of McDonald’s businesses are owned by franchisee operating full time

in more than 33,000 restaurants in 125 countries. MacDonald’s benefit from cost reduction

through economies of scale because of its enormous size and its huge global presence allows it

to diversify risk involved with the economic performance of specific countries. In international

markets, MacDonald’s is well placed to expand and take advantage of long-term economic

growth.

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One of the main competitive advantages of McDonald’s is strategic locations; these restaurants

have global locations in all major airports, cities, along the highways, tourist locations and

shopping malls.

The McDonald’s brand is the most well known house-hold brand, the golden arches and spokes

character (Ronald McDonald’s the clown) is most recognizable logo in the globe. McDonald’s

marketing has successfully created a brand image of fast food delivery speed, cleanliness and

customer care in the minds of millions of consumers. This strong brand recognition creates

significant opportunities for the company. MacDonald’s is able to generate more sales because

of its brand recognition.

Strong and marketable product which comes with affordable price are able to captivate

children and youth society, also the low and mid-range income community who forms the

majority of the consumer power in fast food industry.

Customer knows what to expect when walking into McDonald’s restaurant. Innovation is a key

emphasis for McDonald’s to produce new product and diversifies its business venture to suit to

the changing trends and tastes of people and culture around the globe. McDonald’s is easily

adapted their global restaurants to appeal to cultural indifference’s around the world. Its

products are localized to the people’s culture and taste in the country. For example, in Islamic

countries, McDonald’s restaurants maintain “Halal” menu, signify the compliance with Islamic

laws of food preparation. In India, the McDonald’s menu is adapted to local Indian culture

McDonald’s has good governance of its operating line, following strictly food safety guidelines

to provide nutritional values in the food. There were more than 2000 inspections checks in the

food preparation processes. McDonald’s runs through 72 safety protocol days to ensure food is

maintained in clean and contaminate-free environment. Nutrition information is provided to

customer and it is printed on all packaging including in McDonald’s internet web-sites.

McDonald’s is a community oriented and socially responsible company. The famous Ronald

McDonald’s Houses provides accommodation, food and sibling support for families with

children needing extensive hospital care.

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Weaknesses

Over the years, McDonald’s had created successful branding and image in the heart of children

and teenage group. The market segment is too focusing on kids. McDonald’s must start to

change its marketing strategy and expand their business into other segment to remain

competitive. McDonald’s brand is often related to unhealthy food and obesity, such as

hamburger, french fries. Little has been done by McDonald’s to counter these claims. One of

the fastest growing trends in recent year is organic food. McDonald’s has yet to capitalize on

the trend towards organic food.

Like any other organization in the hospitality industry, McDonald’s is also faced with high

employee turnover rate, which leads to more money spent on recruitment and training. In

India employee turnover rate is as high as 83% in front end as per Thomas Reuters Report.

McDonald’s has problem with fluctuations in operating and net profits which impact its

investor relations.

MacDonald’s has to deal with the prospect of looming market saturation, which could make it

difficult to add new outlets. There is also an increasing price competition driven by too many

competitors, which reduces the company’s ability to increase revenue. Nevertheless, the swift

of the company’s focus from a value menu to a more diverse one has recently limited the

negative effect of the intense price competition that was traditionally taking place among the

industry leaders.

Opportunities

With a good management and product development, the company will survive all the changes

and competition in these day and future. Changing trends in eating habits toward more

healthy eating, seen as a threat to McDonalds can also be seen as an opportunity. McDonald’s

can introduce healthy food such as low calorie items, putting more effort in the R&D on

introducing healthy food and eating habit. McDonald’s can expand its product offering into

organic food. These strategies will allow McDonald’s to ensure their place in top spot above all

others. The management can improve the company fluctuating operating profit with better cost

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control to reduce food wastage and better manage its production and front-line offices with

lean management.

McDonald’s can tapped on outsourcing to reduce resources spent on administration and also

food delivery, leverage on off shoring for 24 by 7 customer care hotline and internet online

technology for taking orders. McDonald’s also needs to cope with the fast changing consumer

needs and trends to ensure sustainability and competitive advantages. The marketing and

product R&D will need to work on offering more varieties to entice existing and new customer

base. For example, besides “fast food”, the business can be expanded to offer “fast beverages”

such as coffee varieties, milk shake series. One of the strategies that McDonald’s can venture

into is expanding its restaurant varieties to capture different market segments such as business

executives, internet café surfer. Such recent business innovative is Mc Café.

McDonald’s still needs to penetrate in many cities and has tremendous opportunity in India.

Openining a fully veg restaurent was really welcomed. If McDonalds keeps inventing like this it

has a really huge potential to grow.

Threats

McDonald’s faces major competition from the fast food industry and hamburger business.

McDonalds faces huge competition from KFC, Subway, Pizza Hut, Dominos, Jumbo King and

other local vada pav retailers. Other franchisee fast food restaurents also giving McDonalds run

for its money. McDonald’s had faced critics from parent advocate groups for their marketing

practices and ethicality.

McDonald’s, just like other fast food industry, often receives bad press because of its link

obesity. McDonald’s has been sued multiple times for “unhealthy food” allegedly with addictive

additives contributing to obesity epidemic. As a leader in the global food service retailing

business, McDonald’s needs to strategize on its business, market, product R&D to minimize and

overcome these threats.

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Major threat McDonalds faces is to keep prices low. Inflation is increasing in India and it is hard

to keep prices low. McDonalds has to find innovative solutions to keep the prices low.

PESTEL Analysis

Political Factors

The international operations of McDonald’s are highly influenced by the individual country’s

policies enforced by each government. For instance, there are certain groups in India, Europe

and the United States that clamour for state actions pertaining to the health implications of

eating fast food. They have indicated that harmful elements like cholesterol and adverse effects

like obesity are attributable to consuming fast food products.

On the other hand, the company is controlled by the individual policies and regulations of

operations. Specific markets focus on different areas of concern such as that of health, worker

protection, and environment. All these elements are seen in the government control of the

licensing of the restaurants in the respective states of the country. For instance, there is an

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impending legal dispute in the McDonald’s franchise in India where certain infringement of

rights and violation of religious laws pertaining to the contents of the food. The existence of

meat in their menus in India is apparently offensive to the Hindu religion in the said market.

There are also other studies those points to the infringement of McDonald’s Stores with

reference to the existing employment laws in the target market. Like any business venture,

these McDonald’s stores have to contend with the issues of employment procedures as well as

their tax obligations so as to succeed in the foreign market like India.

India is quite rich as far as the political structure and policies are concerned that is the reason

why international organizations face difficulties when they are entering in India. In the similar

manner it can be said that India is a nationalist country that is the reason why they create

difficulties for international entrants. However, there are certain other factors like consumer

taxation, different political infrastructures and the scenario of the global market.

Economic Factors

Organisations in the fast food industry are not excused from any disputes and troubles.

Specifically, they do have their individual concerns involving economic factors. Branches and

franchises of McDonald’s have the tendency to experience hardship in instances where the

economy of the respective countries are hit by inflation and changes in the exchange rates,

India is not an exception to it. The customers consequently are faced with a stalemate of going

over their individual budgets whether or not they should use up more on these foreign fast

food chains like McDonalds. Hence, these chains may have to put up with the issues of the

effects of the economic environment. Particularly, their problem depends on the response of

the consumers on these fundamentals and how it could influence their general sales. In

regarding the operations of the company, McDonald’s tend to import much of their raw

materials into a specific country’s territories if there is a dearth of supply. Exchange rate

fluctuations will also play a significant role in the operations of the company.

As stated in the paragraph above, McDonald stores have to take a great deal of consideration

with reference to their microenvironment. The company’s international supply as well as the

existing exchange rates is merely a part of the overall components needed to guarantee success

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for the foreign operations of McDonald’s. Moreover, it is imperative that the company be

cognizant of the existing tax requirements needed by the individual governments on which they

operate. This basically ensures the smooth operations of the McDonald’s franchises. In the

same regard, the company will also have to consider the economic standing of the country on

which they operate on. The rate at which the economy of that particular country grows

determines the purchasing power of the consumers in that country. Hence, if a franchise

operates in a particularly economically weak country, their products shall cost higher than the

other existing products in the market, then these franchises must take on certain adjustments

to maintain the economies of scale. However in case of India the company has been able to

maintain a constant level of prices for their products.

Socio-cultural Factors

McDonald’s seem to function on several fields to guarantee lucrative returns for the

organisation. To illustrate, the organisation improves on establishing a positive mind-set from

their core consumers. McDonald’s indulge a particular variety of consumers with definite types

of personalities. It has also been noted that the company have given the markets such as the

United Kingdom and India, an option with regards to their dining needs. McDonald’s has

launched a sensibly valued set of food that tenders a reliable level of quality for the respective

market where it operates. Additionally, those who are aged just below the bracket of thirty-five

are said to be the most frequent consumers of McDonald’s franchises.

The multifaceted character of business nowadays is reflected in the harsh significance of the

information on the subject of the existing market. This procedure is essentially identified in the

field as market research. Information with regards to the appeal and potential fields of the

market would double as obstructions to the success of the company if this area of the

operations is neglected. In the case of McDonald’s they establish a good system in determining

the needs of the market. The company uses concepts of consumer behaviour product

personality and purchasing decisions to its advantage which is clearly evident in case of India as

the company was quick in removing their Pork and Mutton products from India’s menu. It is

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said to have a major influence on the understanding of the prospective performance of the

organisation in a particular market.

Technology Factors

McDonald’s generates a demand for its own products. The company’s key tool for marketing is

by means of Online Facebook and Google ads, Collaboration with websites like Snapdeal and

Timesdeal to promote sales in India, television advertisements, banners and hoardings. There

are similarly some claims that McDonald’s are inclined to interest the younger populations

more. The existence of ‘play spots’ as well as ‘toys in meals’ offered by the company shows this

actuality. Other demonstration of such a marketing strategy is apparent in the commercials

they use. They employ animated depictions of their characters like Grimace, Ronald and Ham

burglar. Other advertising operations employ popular celebrities to promote their products.

The ‘like’ has become endorsers for McDonald’s worldwide “I’m loving it” campaign. Moreover,

the operations of McDonald’s have significantly been infused with new technology. Elements

like the inventory system and the management of the value chain of the company allows for

easy payments for their suppliers and other vendors which the individual stores in respective

markets deal with. The integration of technology in the operations of McDonalds tends to add

value to their products. Basically, this is manifested in the improvements on its value chain. The

improvement of the inventory system as well as its supply chain allows the company to operate

in an international context.

McDonalds use the internet to their advantage. The cost-effectiveness, interactivity and real-

time effects of the communications are a good way to find suppliers. It is also a good way to

correspond with the respective McDonald’s headquarters in every Country. The company must

also look into the use of IT to enhance their inventory operations. As the operations in its

inbound and outbound logistics improve, the company will expect significant savings and

reduction of costs in the operations.

Environmental Factors

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The social responsibilities of McDonald’s on the country are influential to the operations of the

company. These involve accusations of environmental damage. Among the reasons why they

are charged with such claims is the employ of non-biodegradable substances for their drinks

glasses and Styrofoam coffers for the meals. Several civic groups in India have made actions to

make the McDonald’s franchises in India aware of the rather abundant use of Styrofoam

containers and the resultant abuse of the environment.

The company should find out the environmental regime that governs the operations in every

market. It should also monitor the waste disposal of the company. McDonald’s should minimize

the use of Styrofoam materials and plastic cups. Constant updating of the social corporate

responsibility is imperative. This should also entail that the headquarters should take in hand, a

manner of internal control of those that would infringe upon this company objective. Sanctions

such as revoking of the franchise license or a particularly high fine should be installed to serve

as a deterrent to infringement.

Legal Factors

There has been the recurrent bellowing in opposition to the fast food industry. This has

similarly made McDonald’s apply a more careful consideration on their corporate social

responsibilities. On the whole, this addressed the need of the company to form its corporate

reputation to a more positive one and a more socially responsible company. The reputation of

McDonald’s is apparently a huge matter. Seen on the website of the company, it seems that

they have acquired strides to take in hand the key social censures that they have been berating

them in the past decades. The company has provided their customers the relevant data that

they need with reference to the nutritional substances of their products. This is to attend to the

arguments of obesity charged against the products of the company. In the same way, the

consumers provided freedom in choosing whether or not they want to purchase their meals.

This is tied up with the socio-cultural attributes of the market on which they operate. For

instance, operations in predominantly Muslim countries require their meat to conform to the

Halal requirements of the law. In the same regard, those that operate in countries in the

European Union should conform to the existing laws banning the use of genetically modified

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meat products in their food. This was prime reason which forced McDonalds to eliminate beef,

pork and Mutton out of India’s product menu. Other legal concepts like tax obligations,

employment standards, and quality requirements are only a few of important elements on

which the company has to take into consideration. Otherwise, smooth operations shall be hard

to achieve.

As a certified fast food operator, there are many regulations and procedures that McDonalds

should follow. McDonalds should protect its integrity and consumer confidence by ensuring all

materials and process are as claimed or must followed. Other legal requirement that the

business owner should follow as stipulated in laws are such as operating hours, business

registration, tax requirement, labour and employment laws and quality & environment

certification (such as ISO) in which the outlet has been certified. The legal requirement is

important because the offenders will be fined or have their business prohibited from operating

which can be disastrous. The company should hire local counsels to deal with the legal conflicts

in individual markets on which the company may encounter. This shall ensure the company that

the lawyers that will handle their legal affairs are more versed with the legal regime that would

ease out certain problems on their operations.

Conclusion

As we all know that the most significant contribution of this generation is the combination of

globalization and internationalization in the businesses sector. Developments in the

international setting have an effect on the more particular factors in the operations in individual

organisations. Alterations could take place and require intense modifications to the operations

such that it could have an adverse effect on the entire structure of the company. However, as

indicated in the above PESTEL analysis, this could be acquired by setting a certain level of

flexibility in the organisation. This level of flexibility can basically be acquired through the

acquaintance of both the internal and external environment of the company.

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Even though McDonald’s may have been deemed as demigod in the fast food business in the

international scene, but what it preserves as revealed in its processes is the need for flexibility.

The slight changes that take place in the market have an effect on the operations of the

business in any case. This denotes that having the information on the effects of these

alterations swiftly provides these fast food industry giants to take fine-tuning actions on their

acts and still preserve their market position. As implied the markets of nowadays manifest a

cutthroat rivalry with the individual competitors, recognized brands or otherwise. Hence, any

business in spite of the muscle of the brand name or the size of its reserves could not afford any

failures in their individual markets.

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McDonalds Marketing Mix (7 P’s)

After segmenting the market, finding the target segment and positioning itself, each company

needs to come up with an offer. The 5 P’s used by McDonalds are:

1. Product

2. Place

3. Price

4. Promotion

5. People

6. Physical Evidence

7. Process

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Product:How should the company design, manufacture the product so that it

enhances the customer experience?

Product is the physical product or service offered to the consumer. Product includes certain

aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non-

tangible aspects of the product and service.

McDonalds has intentionally kept its product depth and product width limited. McDonalds

studied the behaviour of the Indian customer and provided a totally different menu as

compared to its International offering. It dropped ham, beef and mutton burgers from the

menu. During their study McDonalds found out that India is a country where 85% population

doesn’t eat beef so its no point serving beef. India is the only country where McDonalds serve

vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds

continuously innovates its products according to the changing preferences and tastes of its

customers. The recent example is the introduction of the Mcspicy Chicken. McDonalds found

out that Indians have peculiar connection with spicy food. Hence, McDonalds came out with

perry perry fries and its latest Mcspicy burgers.

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McDonalds bring with it a globally reputed brand, world class food quality and excellent

customer specific product features.

Place: Where should be the product be available and the role of distribution

channels?

The place mainly consists of the distribution channels. It is important so that the product is

available to the customer at the right place, at the right time and in the right quantity. There is

a certain degree of fun and happiness that a customer feels each time he dines at McDonalds.

There are certain value propositions that McDonalds offer to its customers based on their

needs. McDonalds offers hygienic environment,good ambience and great service. Now

McDonalds have also started giving internet facility at their centres and they have been playing

music through radio instead of the normal music. There are certain dedicated areas for

children where they can play while their parents can have some quality time together.

Price: What should be the pricing strategy?

McDonalds should also take into the consideration the probable reaction from the competitor

to the pricing strategy. This is the most important part of the marketing mix as this is the only

part which generates revenue. All the other three are expenses incurred. The price must take

into consideration the appropriate demand-supply equation.

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In 2004, McDonald’s came up with a very catchy punch line “Aap ke zamane mein ,baap ke

zamane ke daam”. This was to attract the middle and lower class consumers and the effect can

clearly be seen in the consumer base McDonalds has now.

McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal,

family meal etc to increase overall sales volumes.

Promotion: What is the suitable strategy and channels for promotion of the

product?

The various promotion channels being used by McDonald’s to effectively communicate the

product information are given above. A clear understanding of the customer value helps decide

whether the cost of promotion is worth spending.

There are three main objectives of advertising for McDonald’s are to make people aware of an

item, feel positive about it and remember it. The right message has to be communicated to

the right audience through the right media. McDonald’s does its promotion through television,

hoardings and bus shelters. They use print ads and the television programmes are also an

important marketing medium for promotion.

Some of the most famous marketing campaigns of McDonald’s are:

“You Deserve a break today, so get up and get away- To McDonald’s”

“Aap ke zamane mein ,baap ke zamane ke daam”.

“Food, Folks, and Fun”

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“I’m loving it”.

McDonalds also banks on its 80 – 20 menu board. In this 80% is visual and 20% is descriptive.

Also it has kept prices like 29,49,69,99 so that its easier for people to understand. Pricing

strategies, quick service, no tips attracts middle class.

Key objectives of McD’s promotion strategy were to, “ Get them in.Trade them up.Get them

back ”.

• Get Them In : To make consumers step into McDonald’s restaurant.

• Trade Them Up : To shift the consumers to McDonald’s core products like Burger with

cheese, McChicken Burger, Fillet-o-Fish, etc.,

• Get Them Back:To increase the frequency of visit by making the McD’s brand experience

People: How to converge the benefits of internal and external marketing?

McDonald’s understands the value of both its employees and its customers. It understands the

fact that a happy employee can serve well and result in a happy customer.

McDonald continuously does Internal Marketing. This is important as it must precede external

marketing. This includes hiring, training and motivating able employees. This way they serve

customers well and the final result is a happy customer.

The level of importance has changed to be in the following order (the more important people

are at the top):

1. Customers

2. Front line employees

3. Middle level managers

4. Front line managers

The punch line “I’m loving it” is an attempt to show that the employees are loving their work at

McDonalds and will love to serve the customers.

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The McDonalds Experience

Marketing in a services industry is becoming an increasingly complex challenge. The paradigms

of service marketing demand a passionate understanding of customer expectations and

perceptions, and linking them to product design & delivery as well as operational planning. This

is where McDonald’s has excelled due to its ability to successfully integrate the customer’s

perspective in its products and operations in a comprehensive manner. The revamped menu in

India is an example of McDonald’s strategy of integrating the customer’s perspective in its

products. And, the operational integration is evident from McDonald’s emphasis on its suppliers

as its customers as well as its treatment of its consumers as co-producers of services.

The ultimate aim of Service Marketing is not just to become a Service Leader but to create a

Service Brand. The Service Delivery Process is the key to achieving this aim of Service

Marketing.

During the Service Delivery Process, each moment of interaction between the firm and the

customer, called “Moments of Truth”, helps understand the opportunities that a firm has to

win or lose the customer. For example, these “moments of truth” are created for McDonald’s

every time the guard at the McDonald’s outlet meets the customer, every time an attendant

takes down the order from the customer waiting in the queue, every time the cashier interacts

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Core Product

Supplementary Process

Service Delivery Process

with the customer, every time the attendant helps the customer guided the customer towards

the table, every time the attendant cleans the table, etc.

Managing these “moments of truth” is a great challenge in Service Marketing especially due to

customer’s involvement as a co-producer of services (e.g. McDonald’s self-service concept

wherein the customer not only collects the order but also cleans the table after consuming the

food). However, McDonald's has been able to create a great experience for its customers by

understanding the nature of the entire Service Delivery Process and the various stages in the

process that are exposed to the customers. Transparency in the processes at its outlet has

helped McDonald’s bring the back office in its outlet at the front so that the customer is able to

know the operations and provide feedback on service design improvements.

Internal Customer Focus is equally important as External Customer Orientation in order to win

these “moments of truth”. McDonald’s focus on its People and their service delivery methods

therefore plays a very important role in creating a successful Service Brand. The quality and the

consistency of the service delivered by McDonald’s have been greatly enhanced by the

combination of the factors mentioned above. This has helped McDonald’s become Service

Leader and a successful Service Brand. This is evident from the fact that very few of its

customers opt for take-home parcels or home deliveries while most of them prefer to eat at the

outlet and enjoy the McDonald’s experience.

Physical evidence

The physical appearance affects not only the impression outsiders have of a business but also

the way that business functions. McDonald’s focuses on clean and hygienic interiors of its out

lets at the same time they are attractive. It maintains a proper decorum at its joints. Staff

members dress in McDonald’s Dress code with Green shirts, Blue trousers, Black caps and

Customised Ronald McDonald’s tie.

Building maintenance and visible cues are provided by the golden arches, the trademarks and

the logo’s in the premises. The delivery scooters also add to the physicality of the company.

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Processes

McDonald’s worldwide is well known for the high degree of respect for the local customs and

culture. McDonald’s has developed a menu especially for India with vegetarian selections to

suit Indian tastes and preferences. Keeping in line with this, McDonald’s does not offer any beef

or pork items in India. In the last decade it has introduced some vegetarian and non-vegetarian

products with local flavours that have appealed to the Indian palate. There have been

continuous efforts to enhance variety in the menu by developing more such products. It is

completely transparent and visible to the customers, allowing them to judge hygiene standards

where the process takes place. The customers are even invited to check the ingredients used in

the food.

McDonald’s has also re-engineered its operations repeatedly in its 11 years in India to address

the special requirements of a vegetarian menu. Vegetable products are 100% vegetarian, i.e,

They are prepared separately, using dedicated equipment and utensils.

Only pure vegetarian oil is used as a cooking medium.

Cheese and sauces are completely vegetarian and egg less.

Separation of vegetarian and non-vegetarian food products is maintained throughout the

various stages of procurement, cooking and serving.

Food manufacturing transparent to customers across the counter.

Training to the licensees about how to operate the franchise.

Invented the most efficient cooking equipment with use of latest technology.

New methods of food packaging and distribution are followed

Competitors Analysis

Dominos Pizza :

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The brand, Domino's Pizza, was founded in the US in 1960 by Thomas and James Monaghan.

Since then, it has grown into a global network of over 9000 pizza stores in more than 60

countries around the world.

Jubilant FoodWorks Limited (the Company) is a Jubilant Bhartia Group Company, The Company

was incorporated in 1995 and initiated operations in 1996, The Company got listed on the

Indian bourses in February 2010, Mr, Shyam S, Bhartia, Mr, Hari S, Bhartia and Jubilant Enpro

Private Ltd, are the Promoters of the Company. The Company & its subsidiary operates

Domino's Pizza brand with the exclusive rights for India, Nepal, Bangladesh and Sri Lanka, The

Company is India's largest and fastest growing food service company, with a network of 500+

Domino's Pizza stores

Stores (as of 31st March, 2012)The Company is the market leader in the organized pizza market

with a 54% market share (Euromonitor Report 2010) and 70% share in the pizza home delivery

segment in India, The Company has strengthened its portfolio by entering into an agreement

with Dunkin' Donuts Franchising LLC, for developing the Dunkin' Donuts brand and operating

restaurants in India,

Over the period since 1996, Domino’s Pizza India has remained focused on delivering great

tasting Pizzas and sides, superior quality, exceptional customer service and value for money

offerings. We have endeavored to establish a reputation for being a home delivery specialist

capable of delivering pizzas within 30 minutes or else FREE to a community of loyal consumers

from all our stores around the country.

Domino’s vision is focused on " Exceptional people on a mission to be the best pizza delivery

company in the world!" We are committed to bringing fun, happiness and convenience to lives

of our consumers by delivering delicious pizzas to their doorstep and our efforts are aimed at

fulfilling this commitment towards a large and ever-growing customer base.

Domino’s constantly strives to develop products that suit the tastes of our consumers and

hence delighting them. Domino’s believes strongly in the strategy of ’Think global and act local’.

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Thus, time and again we have been innovating with delicious new products such as crusts,

toppings and flavours suitable to the taste buds of Indian Consumers. Further providing value

for money and affordable products to our consumers has been an important part of our efforts.

Our initiatives such as Fun Meal and Pizza Mania have been extremely popular with consumers

looking for an affordable and value for money meal option.

Domino’s believes that when a box of pizza is opened, family and friends come together to

share the pizza. Hence, our brand positioning: ‘Yeh Hai Rishton Ka Time’

KFC ( Kentucky Fried Chicken )

KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville,

Kentucky, United States, which specializes in fried chicken. An "American icon", it is the world's

largest fried chicken chain and the third largest restaurant chain after Subway and McDonald's,

with over 17,000 outlets in 115 countries and territories as of December 2011

The chain primarily sells fried chicken pieces and variations such as chicken sandwiches and

wraps, salads and side dishes such as French fries and coleslaw, desserts and soft drinks, often

supplied by PepsiCo. Its most famous product is pressure fried chicken pieces, seasoned with

Sanders' "Original Recipe" of 11 herbs and spices. The exact nature of these ingredients are

unknown, and represent a notable trade secret. KFC is famous for the slogan "finger lickin'

good", which has since been replaced by "Nobody does chicken like KFC" and "So good". KFC's

two major single markets are in its home country and China, which together contain around

half of its outlets.

The first Indian KFC was opened in the city of Bangalore in June 1995. This resulted in protests

from the left wing, anti-globalisation and environmental campaigners, as well as local farmers,

who believed that the chain was bypassing local producers. Many Indians protested the

onslaught of consumerism, the loss of national self-sufficiency, and the disruption of indigenous

traditions. The protests came to a head in August 1995, when the Bangalore outlet was

repeatedly ransacked. The Bangalore outlet demanded, and received, a police van permanently

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parked outside it for a year. M. D. Nanjundaswamy claimed that KFC would adversely affect the

health of the impoverished, by diverting grain from poor people to make the more profitable

animal feed. Former environment minister Maneka Gandhi joined the protestors. KFC was also

accused of using illegally high amounts of monosodium glutamate (MSG) and frying its food in

pork fat. A store in Delhi was closed by the authorities, purportedly for health reasons, but

more likely to avoid a repetition of the Bangalore incident. KFC eventually abandoned the

Indian market, not returning until 1999, with a new Bangalore outlet.This was the sole KFC in

India until 2004, when the chain began to expand.

KFC has the strategic objectives of expansion along with profits and sales growth. KFC has also

been applying its strategies at improving services and making them more and more customer

friendly. It has not only been customizing its menu according to the countries that it has been

operating in, it has also been trying to cater to different ethnic groups like African Americans

and Hispanics. Such types of strategies are focused on increasing the customer base by better

customization of products. Other than the traditional eat-in restaurants, KFC has also been

expanding into non-traditional facilities like shopping malls, hospitals, universities, stadiums;

office buildings etc and a number of strategies have been formulated to aid this kind of

expansion.

Subway

Subway is an American restaurant franchise that primarily sells submarine sandwiches (subs)

and salads. It is owned and operated by Doctor's Associates, Inc. (DAI). Subway is one of the

fastest growing franchises in the world with 37,881 restaurants in 98 countries and territories

as of November 7, 2012. It is the largest single-brand restaurant chain globally and is the

second largest restaurant operator globally after Yum! Brands (over 37,000 locations). Opened

in India in 2001 at Saket,Delhi

The strategic objectives of Subway focus on creating a global strategic plan to enable Subway

restaurants to succeed internationally. Other than this subway is intent upon introducing the

concept of ‘healthy fast food’. Sandwiches of Subway have been included in diet plans by

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experts. Subway’s stand regarding obesity in children is not new to its customers. Strategies at

Subway are not only about a really ambitious increase in franchises all over the world but they

are also about making the food more and more appealing to the health conscious customers

because health conscious attitudes, according to the experts, are here to stay now.

One of the greatest competitive advantages that Subway was born with is its healthy menu. The

salads and sandwiches appeal much more to the people as compared to fried chicken, burgers,

fries and pizzas. With its advertising and promotion, Subway has long been highlighting its

healthy food in advertising and promotions and with the passage of time, it has established

itself as a healthy brand. Another competitive advantage that subway enjoys is the fact that

along with traditional locations, Subway restaurants can be found in more than 4,000 non

traditional locations such as food courts, health clubs, hospitals, universities, amusement parks

or just about anywhere. In fact, Subway restaurants can even be found in automobile

showrooms and Laundromats! This global presence is indeed a sustainable advantage for

Subway and needs to be managed properly. Subway’s fresh food is also a competitive

advantage because unlike its competitors like McDonald’s it allows its franchisees to choose

their own food suppliers, to ensure they can access the freshest ingredients.

Pizza Hut

Pizza Hut is an American restaurant chain and international franchise that offers different styles

of pizza along with side dishes including salad, pasta, buffalo wings, breadsticks, and garlic

bread.

Corporately known as Pizza Hut, Inc., it is a subsidiary of Yum! Brands, Inc., the world's

largest restaurant company.

As of 2012, there were more than 6,000 Pizza Hut restaurants in the United States, and more than

5,139 store locations in 94 other countries and territories around the world

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Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W

and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain with over

12,500 restaurants across 91 countries.

In India, Pizza Hut has 140 restaurants across 34 cities, including Delhi, Mumbai, Bangalore,

Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others. Yum! is in the process of

opening Pizza Hut restaurants at many more locations to service a larger customer base across

the country.

When we talk about strategic objectives, Pizza Hut says: We want to satisfy our customers by

offering them “The best”. Diversification of the products that they offer has

always been a focal point of strategies at Pizza Hut. The strategies at Pizza Hut are guided by

principles like Cleanliness, Hospitality, Accuracy, Maintenance, Product

quality and Speed (CHAMPS). Since it’s a global chain, the strategies are based

upon customizing the services, advertising and marketing activities according to the countries

that they are operating in. Customer service and satisfaction have of course always been a vital

aspect of the strategies. Another important feature of the Pizza Hut’s

strategies are the 3 Fs (Fun, Friendly and Familiar).Problems and Weaknesses:

At one time, the biggest marketing problem Pizza Hut faced was lunch. As compared to

McDonald’s, its restaurants had virtually no lunch time sales, and neither did any of its pizza

competitors. The reason, of course, is that it takes 20 minutes to cook a pizza from scratch in a

traditional pizza oven, and most people won’t spend that long at lunch time waiting to be

served. By using a new, continuous-broiling technology adapted from burger business, Pizza

Hut developed a personal pan pizza that could be served in less than 5 minutes. It was quick,

tasty and moderately priced. And Pizza Hut rolled it out to all 4500 stores worldwide and locked

up the pizza-lunch business almost everywhere, almost overnight.

One of the weaknesses of Pizza Hut that it hasn’t overcome yet is its price. Local chains are

constantly springing up, offering lower prices and similar recipes. Most people don’t mind

giving a lower price for slightly different taste because of which the sales at Pizza Hut at are

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suffering. Growing awareness about eco-friendliness has forced a lot of the food chains

to maintain practices that conform to international environmental standards. For

example McDonald’s is introducing coffee beans grown in environmental friendly conditions

in order to appeal to the people who are conscious about environmental friendliness. In the

pizza selling restaurants, organic pizzas are the new concepts that are appealing to the masses

to these days. It’s a phenomenon that highlights the health conscious attitude as well as

environmental friendliness. Pizza Hut on the other hand has not come up with any strategy in

this area and if it doesn’t even in the future, it is going to lag behind the chains that offer

healthier food.

Pizza Hut has the first mover advantage in the pizza chains because of which it has developed a

strong customer base which is one of its strengths. In the Indian QSRs industry, the delivery

service of Pizza Hut is clearly a competitive advantage that it enjoys. Pizza Hut’s delivery service

is one of quickest and the pizzas delivered are oven hot in the real sense of the world. Pizza Hut

is often referred to as ‘Pizza Innovation Leader’ because it is constantly coming up with new

varieties of pizzas to appeal the different audiences and at the same time, people at the Pizza

Hut have a really good idea about which varieties are appealing to the customers and they are

thus retained in the menus.

The first mover advantage is an advantage that Pizza Hut was born with but time, Pizza Hut has

been successfully creating competitive advantages like a traditionally strong brand name for

itself and the quality service that it provides.

Local Vada Pav’s and Udipi Restaurants

Local vada pav’s and udipi restaurants have long been here in India. Despite the entries of

various MNC’s entering India these restaurants are still going strong. There are thousands and

thousands of these restaurants present in India. The main competitive advantage of these

restaurants are affordability and availability near business districts and near home. Local vada

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pav dealers have traditionally been famous in India because their roadside presence

everywhere and low prices. These factors have been crucial in their survival. Local Vada Pav is

available at 8rs whereas any burger of Mc’D is available from 25rs. Hence, low income group

individuals prefer these retailers over Mc’D or any other MNC

Source : as per each companies website

Number of outlets of each store

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STP (Segmentation, Targeting and Positioning )

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To develop the marketing strategy, companies need to understand its target customers. To

communicate product effectively to the customers they need to segment its target market and

position the product properly.

McDonalds

Segmentation-

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McDonalds has segmented their products according to bases of Demographic, Psychographic

and Behavioural.

1) Demographic- Kids, Family and Students

McDonalds offers different products like Happy Meal which includes a free toy for kids. For

families it has made different outlets and meals which are suitable for takeaways and drive-

thru. McDonalds has made its environment which is suitable for students of school to hang

out with their friends and can get their lunch at McDonalds.

2) Psychographic- McDonalds has adopted itself according to the convenience and lifestyle

of the Indian consumers, as India has a huge vegetarian population so McDonalds came

up with a different and new product line which includes items like Mc Veggie burger and

Mc Aloo tikki Burger. They also made McDonalds as a place to relax and even for

entertainment.

3) Behavioural- Occasions such as birthday etc.

Target Market-

Working Adults- Who seeks convenience meals.

Students- Primary, Secondary as well as college students.

Families- Which prefers to go out for meals on weekend and holidays.

Cafe Goers- The people who seek place to relax or read or even business entertainments.

Target Segment What is McDonald’s for me?

A Family with children A treat to children, a fun place to be for the children.

Urban customer on the

move

Great taste, quick service without affecting the work

schedule

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Teenager Hangout with friends, but keep it affordable.

Positioning-

Positioning is a process of creating an image in the mind of consumers by which consumers can

understand the uniqueness about your product when compared to competitor’s product. In

India positioning of McDonalds has been directed as a Family restaurant. Then they started

positioning according to the kids as well by introducing new advertising of toys with their

products such as “Happy Meal”. In the start they made certain special efforts to not allow it to

convert into a teenage and adults (20 to 24 years of age) hangout place. Now youngster and

adults has become so use to fast foods that McDonalds has targeted them and tried to position

McDonalds as a place for all. They also targeted adults because they can pay for quality and

variety of products. This helped McDonalds to be most recognizable brand in India for people of

all ages. Or we can say that they followed concept of undifferentiated marketing in which they

offered same marketing mix to mass audiences.

KFC

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Segmentation-

Geographic-

KFC has outlets internationally and sells its products according to geographic needs of the

customer. In India KFC focuses how geographically its customers demand different products.

In north India Chicken is the main selling product, while in the south the Veg. items sell more than the

chicken.

Demographic-

In demographic segmentation, the market is divided into groups based on an age, gender, family size,

income, occupation, religion, race and nationality. KFC divides the market on demographic basis in this way:

Age between 6 to 65

Including both genders

According to family size

According to income level

Psychographic-

Dividing a market into different groups based on social class, lifestyle, or personality

characteristics is called psychographic segmentation. KFC divides market on the basis of

psychographic variables like-

Social classes-Middle and upper

Personality

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Target Market-

As the outlets of KFC are in posh area and prices are too high (overhead expenses-rent, air-conditioning,

employees), so KFC targets upper and middle classes. Target market depends upon size and growth rate

of population, Company resources and structural attractiveness of market segment.

Positioning-

In KFC feedback is taken from the customer in order to know the customer demands and then

improvements are made in products. KFC focuses on pure and fresh food in order to create a distinct and

clear position in the minds of customers KFC has a strong brand name and they are leading the

market in fried chicken.

Pizza Hut

Segmentation

Geographic-

Localize product, advertising, promotions and sales efforts to fit the needs of the individual

areas and cities.

Psychographic-

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Dividing the market into different groups based on social class, lifestyle or personality

characteristics. For e.g. they offer their customers to choose price between 499 or 699.

Target Market-

The target market of pizza hut is middle level and upper level class. Mainly they are targeting

the college graduates as they spend a lot on fast foods.

Positioning-

Pizza hut is positioning themselves on the basis of Quality and Frequency. They are using the

tagline as ‘Best pizzas under one roof’. Also under the saying ‘Customer mania’, they are

positioning themselves as best service provider.

SUBWAY

Segmentation-

Geographic-

Subway segmented their market based on the test of different geographic location. As more

number of people in India is vegetarians, they provide menu mostly with vegetable without

beef.

Demographic-

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Subway concentrates majority of customers on the age group in between 18 to 39 years mostly

the people are either studying or working.

Psychographic-

Subway core customer between the age of 16 to 39 are found to be more health conscious.

Therefore, by providing healthy and fresh food, subway segmented the customer based on the

trends or psychological.

Behavioural-

Subway considers that with hectic and busy lifestyle, catering of fresh, healthy and fast food is

required in everyday life. Subway also make special promotion during occasions like Christmas

and new year by offering gift card, etc. on the purchase of its food. This shows that they

segments he customer based on the occasion under behavioural of its customer.

Target Market

Subway targets market is young adults between age of 16 & 39, although people of all ages and

background enjoy the delicious and healthy sandwiches. Majority of population in India lies in

between these age groups. Subway identified its target market as “Demanding Young People

Who Know Their Own Minds”. The youngsters who like to have nutrition food rather than

pizzas, burgers and fries.

Positioning-

Providing a healthy fast food chain for a healthier and hygienic food is a brand value strategy of

Subway. The listing of the healthy items includes the fresh and fast food items that reflect the

menu. It sends messages to its customer that they are positioned as a fresh and healthy food.

Dominos Pizza

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Segmentation

Geographic

• Region – dominos outlets in different countries is a way of segmenting their market

• according to region and finding out potential markets.

• City – they also segment the cities as class i, class ii, metros, small towns.

Demographic

• age – under 13years, 13 to 21 years21 to 35 years, 35 to 50 years, 50+ years.

• family income – lower middle class, middle class, upper middle class, high class

Targeting

• Dominos pizzas have target the families who like to go out for dinner once in a week.

• They also target teenagers of school.

• Spending habits of college freshmen also indicates a high percentage of money being spent on non-essential items.

• Dominos has made delivery services for those customers who like to have pizzas in their home with their families or friends.

Positioning

India’s Pizza Delivery expert and market leader in the organized pizza home delivery segment

announced the launch of their new brand positioning campaign “Yeh Hai Rishton Ka Time”.

After spending four years with the emotional proposition of Happiness Home delivered-

‘Khushiyon ki Home Delivery’. Domino’s Pizza endeavours to deepen the engagement with

consumers, through its new brand positioning that focuses on relationships and bonding.

Local Vada Pav and Jumbo King

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Segmentation

They have segmented the market into Psychographic, Demographic. Its for anyone who needs

fast snack, on the move. Lower and middle income group people in Mumbai (mainly students

and working class)

Target Market

They mostly target people between age group of 18-30. Mostly to college going students who

prefer easily available fast food also to working professionals who has less time and prefer to

have easily available fast food. Their biggest target customer is the middle level social group.

Positioning-

They have positioned themselves on the basis of quality, hygiene and size. They also position

themselves as the easily available fast food with low cost.

Issues

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McDonald’s had been accused of destruction of vast areas of the rainforest for the production

of cattle to produce beef, promoting unhealthy food with a risk of cancer and heart disease,

taking advantage of children with its advertising and marketing, and cruelty to animals. There

had been complaints as regards the nutrition, hygiene etc.

Social Networking Issues- McDonald’s #McDStories

In mid-January, McDonalds launched a Twitter campaign using the hashtag #McDStories.

McDonald’s asked users to post nostalgic stories about their experiences on Happy Meals,

however, the #McDStories campaign quickly took a whole different turn very quickly as users

started using the hashtag to instead share horror experiences and shock tales. From poor work

conditions to appalling food quality, McDonald’s campaign turned negative attention back to

itself.

Here are just a few examples of tweets on the #McDStories Hashtag:

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Nutrition and Health

One of the most fundamental and enjoyable aspects of the day-to-day lives of people had been

eating food of their choice and the circumstances in which it was eaten. For most people this

generally meant eating the healthiest possible food (bearing in mind constraints of time and

poverty), usually cooked on site and then eaten communally - either in a family or home

setting, or with others while at work or in school. But there were rapid changes as the pace and

46

nature of society had shifted. An industrial or service infrastructure increasingly dominated the

local neighborhoods and people's lives, undermining existing patterns of human interaction,

whether among families, friends, neighbors or in the community in general.

Mass-produced, processed food gradually and increasingly replaced fresh and healthy foods in

people's diets over the course of the twentieth century. In recent decades, McDonald’s

capitalized on this situation by promoting quick meals to be eaten outside the home. This

change in eating habits brought serious consequences to human relations and health. These

consequences sparked a debate about healthy food. They also brought out a whole range of

new campaigns and movements dedicated to encouraging healthy eating and healthy lifestyles.

Macro environmental factors affected McDonald’s, forced it to become defensive, and they had

to resort to lip service to try and deflect public criticism.

In the health debate, food industry was heavily criticized for creating products that are high in

fat, sugar and salt. Health consciousness was rising amongst people with the obesity crisis

hitting the world. The concern was serious as it was children who were the most affected.

Nutrition and exercise issues which were important and needed to be reviewed earlier, now

were considered, discussed, and debated only after witnessing the frightening consequences.

Many critics blamed McDonalds like businesses for public health concerns, contending that fast

food menus and portion sizes contribute to obesity, diabetes and heart disease and a variety of

other diet related problems. But at the same time, it was worthwhile to note that the type of

demand exhibited by the market initiated the processes within the companies. As long as the

demand for fast food continued, nutritional issues would continue to be argued and deliberated

upon. India also had its own set of so called nutritious and non-nutritious food. People in India

appeared to prefer food for its taste. Bhel Puri, Samosas and Potato Wada which were some of

the very popular Indian snacks were

weak in terms of nutrition. However, a large level of population savored them for the spicy

taste ignoring the hygiene and the value in terms of nutrition.

Trans- fats and their use in food also had been a major controversial issue. It had been

established scientifically that artificial trans- fats were bad for human health. In United States,

New York City was the first city to announce a ban on all restaurants from using artificial Trans

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fats with the deadline on July 1, 2007. When the legal system imposed bans and developed a

regulatory framework, the food industry was compelled to respond. In January 2007,

McDonald’s picked new Trans fat free oil for cooking its famous French fries after years of

testing.

In view of the health risks and dangers, it was important that food service did not just

confine to respond to the basic need of hunger. Food industry was required to innovate and

work on introducing healthy eating options and making them available. This would create a

situation where the final choice would then be made by the consumers. A healthy lifestyle only

would help overcome the health problems gripping the society. Awareness about health

needed to be built up and somewhere the responsibility definitely lay with companies which

were into the food business. Health concern was a global call and responding to this was the

need of the hour.

Need for constant Innovation

McDonalds find itself in a peculiar situation. It needs to constantly innovate its products and

practices. But just coming out with new products doesn’t solve the problem. They need to be

organic and healthy. McDonalds mainly targets youth and today’s get bored with a same thing

very quickly. One cannot expect youth to have same burger and fries over and over againg.

McDonalds needs to innovate and bring out new products. Also for kids it needs to keep up

with the trends and get new toys to keep up the interest levels of kids.

Decreasing Market Share

McDonalds is facing cut throat competition from other franchisees as KFC, Dominos, Subway

etc as well Indian franchisee startups as Faasos, Jumbo King and local Vada Pav retailers. Indian

market is growing at 34% CAGR and if McDonalds wants to grow it has to get back to

competition. McDonalds is still the market leader but other competitors are eating away its

share. If McDonalds doesn’t do anything quickly it may find itself in a sticky spot very soon.

Recommendations / Solutions

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Increasing Drive Thru’s : Mcdonalds is looking to increase drive thru’s with the help of IOC. IOC

operates nearly 8000 petrol pumps. We are planning to double the current number of driver

thru’s. We are also planning 30 to 35 drive thru’s in tier 2 cities at the cost of 175 crores.

McDonalds already has some drive thru’s with the association of HPCL and BPCL.

Increasing Pure Veg Restaurants : In India nearly more than 80 million people are hindu. Out of

these 80 million people many of them are veg. McDonalds recently opened a Pure Veg

restaurant near Golden Temple in Punjab. This clearly shows that demand is there to be

captured. Hence, going for more number of veg restaurants can work if planned appropriately.

Mc’D near holy shrines or temples : India is a religious country. There are number of religious

places where people visit in thousands and in some places in lakhs. So there is huge potential to

be tapped. We can initially setup some restaurants on temporary basis and if the idea works we

can go forward.

Targeting the festivals like Kumbh Mela : Gatherings like kumbh melas are goldmine if tapped.

In 2013, 80 million people were expected to visit Kumbh Mela. 80 million is a huge figure even

by India’s population. We can setup temporary kiosks at strategic positions and at the same

time not compromising on the quality of food served. Already companies are looking towards

festivals like Kumbh Mela, if we move fast we can take advantage of First Mover Advantage.

Menu Innovations: McDonalds have indianised its menu for its India entry. Even after so many

years McDonalds have always been innovative in menu. Some experiments have failed while

some are hit. McDonalds realized Indians taste for spice and launched piri piri fries and McSpicy

burgers. But still menu innovations need to be continued as competition is catching up and

people are getting bored really quickly. Hence, menu innovations need to be there in quick

successions. Also, we can look forward to creating a healthy menu such as Chicken salad, oats in

breakfast etc. Indians traditionally love paneer but sadly till now paneer is limited to only wrap.

We can introduce a burger having paneer.

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Innovations : McDonalds need to be innovative and need to think on its feet. One good thing

we did was launching of McDelivery. Delivery concept is wholly a new idea. McDonalds is not

into delivery in US and other markets. But India is unique. We realized that Indians love to eat

with their family and not all the times they would like to come visit store. Also, with this move

we hope to take a bit of market share of pizza chains like Dominos. Indians love to eat with

their families and friends. Hardly anyone comes alone. Keeping this in mind McDonalds needs

to improve its brand image as full family restaurants.

Associations with other brands : McDonalds can associate with other brands to improve its

sales. We can associate with theaters, BEST buses, sites like snapdeal and timesdeal.

McDonalds can launch some innovative schemes which can help improve sales and margins.

Indians love sale and free things so if McDonalds can launch schemes like buy 2 get 1 it will

automatically improve its sales.

Planned Expansion :

Name of the state GDP per capita YOY Growth ( in % )

Andhra Pradesh 71,480 18.4

Himachal Pradesh 74,899 16.1

Gujrat 81400 25

Rajasthan 47,506 17.4

Uttarakhand 82,193 14.6

Sikkim 121,440 18

Goa 192,652 N.A.

Tamil Nadu 94,796 14.8

Maharashtra 101,314 12.8

Delhi 175,812 16.1

Source : http://en.wikipedia.org/wiki/List_of_Indian_states_by_GDP

We have chosen above states to expand based on their GDP per capita, yoy growth and some

are being chosen because of high population base as well as tourist centers. We will look to

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expand in these states . We as McDonalds are looking to expand and double our stores in 2

years. The cost of above expansion will be aroung 600 crore which can vary.

Involvement with community : McDonalds will look to be involve and connect with the

society. As a CSR activities McDonalds can adopt a village or sponsor hospitals or arrange

medical programs in the villages. Especially if we can do CSR activities in the villages from

where we source our raw materials it will be very useful in building a brand image.

Bibliography

http://www.forbes.com/sites/kenrapoza/2012/07/22/mcdonalds-struggles-to-serve-in-india/

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http://www.indiafranchiseblog.com/2013/01/mcdonalds-opens-its-franchise-in-mysore.html

http://www.socialsamosa.com/2013/01/social-media-strategy-review-mcdonalds-india/

http://www.thehindubusinessline.com/industry-and-economy/marketing/article2741612.ece

http://info.shine.com/Industry-Information/Retail/139.aspx

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https://docs.google.com/viewer?a=v&q=cache:k39N5IwSQL4J:www.mcdonaldsindia.com/pdf/news/4Ps-Business-and-Marketing-nov10.pdf+mcdonalds+india+4ps&hl=en&gl=in&pid=bl&srcid=ADGEESgZsNOkoWy40smgVOTMnPIgGsyvUxkheEfMF2JI-kdrxdFNs-ZUU7Cwx_iqEqSN4489fRk9BcSLyr7CYQtwXtzCWa1Gk5vnLjd8t-FKCRW1V1Paf2QSGQ5_bkAKhDxwNNV6IlSY&sig=AHIEtbT_GFg0XAAzXHFDjbWvXp6LUI3E3g

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http://www.forbes.com/sites/abrambrown/2013/01/23/mcdonalds-stale-growth-means-a-future-that-investors-wont-love/

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